Farmer patience on tariffs comes with caution flag for Trump

Iowa hog farmer Howard Hill is feeling the pinch from President
Donald Trump’s get-tough trade policies — his pigs are selling for less
than it costs to raise them. It’s a hit that Hill is willing to take for
now, but his understanding also comes with a caution flag for the
president.

“We have patience, but we don’t have unlimited
patience,” said Hill, who raises about 7,000 hogs a year near the
central Iowa town of Cambridge.

The president’s willingness to
pick trade fights with multiple trading partners at once has set off
volleys of retaliatory tariffs, driving down the price of pork, corn and
soybeans in political bellwether Iowa and elsewhere, and contributing
to a 12 percent drop in net farm income nationally last year.

At
issue are trade talks with China over intellectual property theft and a
new U.S. deal with Canada and Mexico to replace NAFTA that is awaiting
congressional approval. Those efforts could take months to complete. So
scores of farm and business groups are pressing for quicker relief, a
stopgap step to help them out until the more comprehensive trade
agreements are resolved. They’re urging the administration to remove
Canada and Mexico from the list of nations hit with a 25 percent tariff
on steel shipped to the U.S. and a 10 percent tariff placed on aluminum.
Their hope is that action would give the U.S. neighbors cause to remove
retaliatory tariffs they placed on U.S. goods, such as a 20 percent
levy Mexico placed on U.S.-produced hams.

So far, the
administration hasn’t bit on that idea, but it dispatched Secretary of
State Mike Pompeo to Iowa this week to assure farmers that help is on
the way.

For now, Trump is walking a political tightrope: Going to
bat for steel and aluminum makers has endeared him to many voters in
Ohio and Pennsylvania, where steel production is a matter of economic
pride and legacy, but it could end up hurting him in ag-heavy states
like Iowa and Wisconsin that backed him in 2016.

In Iowa, which
casts the first votes of the presidential campaign season, state
Republican Party Chairman Jeff Kauffmann said he’s surprised by how
patient farmers have been with Trump. The Trump Agriculture Department
did approve up to $12 billion in assistance to help compensate farmers
caught up in the tariff battle.

“They all say it’s hurting,”
Kauffman said of the trade disputes. “They’re all saying the stopgap
relief was definitely not a cure-all, but they all understand what the
president is trying to accomplish. It’s quite an interesting
phenomenon.”

But the defeat of two Republican House lawmakers in last year’s midterm elections hints at some of the anxiety in farm country.

State
Democratic Party Chairman Troy Price said the political climate in the
state has changed since Trump defeated Democrat Hillary Clinton by 9
percentage points in 2016, in part because of trade.

“These
tariffs are kind of a slow burn. People are getting more and more
frustrated,” Price said. “It’s one of the reasons Donald Trump is going
to lose Iowa in 2020.”

Some of the Democratic candidates for president are starting to
differentiate themselves from Trump on trade when talking to Iowa
voters. Sen. Kamala Harris of California has criticized the president’s
“go it alone” attitude. Former Rep. John Delaney of Maryland says “we’re
not going to succeed in the global economy by enacting protectionist
policies.”

Still, some Democrats could have trouble seizing on the
issue. Sen. Bernie Sanders of Vermont spent much of the 2016 campaign
railing against the very trade deals that Trump denigrated, calling them
“disastrous” for blue-collar workers.

Sen. Charles Grassley,
R-Iowa, chairman of the Senate Finance Committee, is among the lawmakers
urging the Trump administration to lift the steel and aluminum tariffs
on products brought in from Canada and Mexico. He said it’s a first step
to getting the United States-Mexico-Canada Agreement through Congress.
He also said it would improve the financial picture for farmers.

“Unfortunately
we’re starting to see more and more warning signs that farmers are
running out of leeway with their bankers and landlords,” Grassley said.

Pompeo sought to calm some of those nerves Monday even as he warned that Chinese theft of technology affects agriculture, too.

“The
good news is this — help is on the way,” Pompeo said. “American
producers and Chinese consumers will both be better off. The outcome of
President Trump’s trade negotiations currently under way will pay
dividends for people in each of our two countries.”

Hill said he was encouraged by Pompeo’s remarks.

“I
think people recognize, particularly with China, they have not been
playing by the rules for a long time,” Hill said. “I think producers are
supportive of trying to correct these issues. On the other hand, we
don’t want it to go on forever.”

The American Farm Bureau
Federation reports that Chapter 12 farm bankruptcies in the U.S. went
down in 2018 compared with prior-year levels. But it also noted that
farm debt is at a record high, and that lending standards are tighter
and the cost of credit is rising.

“Certainly many farmers have
liquidated assets to discharge debt. How much longer can many others
endure remains a question,” the farm group said.